Parents live abroad, want to pay deposit on my house....

[DrHolmes]

Hello,

My parents live in Monaco. They have put in an offer on a property in the UK which has been accepted.They are finding it difficult to find a bank willing to give them a mortgage. Barclays do it but they have a minimum property value of £250k. The property they've put an offer is £130k so that rules Barclays out. Their French bank said no to a mortgage but may loan the money. I should add they have 30k to put down as a deposit.

At the moment we don't know whether the mortgage will go through in my parents names or soley as me or me joint with my parents. I have a couple of defaults on my credit report from a few years ago so lenders do not want to give me a mortgage but there are a couple who will but the rates are higher.
Basically, I want to know, if we did the mortgage in my name with the higher rate lenders and my parents supply the deposit, do I have to pay tax on it?

They do have a property in the uk which they purchased before they moved. Will this help the case? I am not sure why it is all so difficult!

Thanks

Sounds as though you need a lawyer.

There is no tax payable on cash gifts, which is essentially what the deposit would be. However, if you get into any situation where you're taking out a significant amount of credit on behalf of someone else or buying a property with someone else, you need the whole thing legally documented for your own protection.

I would consult an accountant if I were you - and possibly a mortgage broker to see if they have any better ideas on getting a lower rate mortgage (seems a shame to pay a higher rate when you are getting the help from your parents to get established).

There is no problem with your parents gifting you money tax free, although I do believe there is an annual limit on the amount, and if they die within seven years the money would be liable for inheritance tax. I would assume the fact they live overseas doesn't make any difference to this. But for peace of mind an accountant could help.

Right. Firstly you will need that deposit in your UK account for some time because otherwise you're going to have to prove an audit trail as to where that money came from (if you could do that it would be better). This is for money laundering issues.

WRT the defaults it very much depends on how many years ago they were satisfied and how your credit has run since.

If you want to PM me specifics I will be able to help but I would need specifics.

I don't think you're right financialwizard. I've had substantial cash gifts from relatives transferred into my account in the past and never once had to prove an audit trail.

Cog I have just had a client declined because the deposit was not in their bank account for 6 months and it was from a european union country but because the audit trail was 'not acceptable' they would not agree to release funds.

If it is UK - UK it is easier to check.